Overview of 5 Levels of Wealth AND How To Achieve Them
Hosts Brian Preston and Bo Hanson (The Money Guy Show / Abound Wealth Management) present a behavioral and practical framework for financial progress: five sequential levels of wealth—Stability, Strategy, Security, Freedom, and Abundance. The episode explains what each level means (and doesn’t), the mindset shifts required, practical steps to move up, signs you’ve reached a level, and resources to act on the advice.
The five levels (quick snapshot)
- Level 1 — Stability: Pay your bills, live on less than you make, build basic savings, eliminate high‑interest debt.
- Level 2 — Strategy: Put a plan in place, automate saving/investing, educate yourself, and avoid chasing “hot” trends.
- Level 3 — Security: Your investments begin to materially protect you; you don’t sweat the small stuff.
- Level 4 — Freedom: Financial independence — your money can pay for your life so you can choose how to spend your time.
- Level 5 — Abundance: Beyond money — clear purpose, contentment; money is a tool to live intentionally and give back.
Level 1 — Stability
What it is
- Consistently covering bills and living on less than you earn.
- Practicing deferred gratification and avoiding bad (high‑interest) debt.
- Beginning to build an emergency fund.
What it isn’t
- Not tied to a specific income level — people with high paychecks can still be unstable if they live beyond means.
- Not “affording” things via long-term financing (renting lifestyle rather than owning).
How to get there (practical steps)
- Track spending and build a budget (big expenses matter more than micro‑savings).
- Reduce expenses and/or increase income (side work, more hours, skills that earn raises).
- Pay off high‑interest debt and secure employer retirement match.
- Resources: MoneyGuy budgeting ultimate guide at moneyguy.com.
Mindset note
- Avoid “getting busy doing nothing” (e.g., over‑optimizing small perks, gamifying credit cards). Focus on the fundamentals.
Signs you’re there
- Emergency fund exists / deductibles covered.
- Employer match captured.
- High‑interest debt eliminated; living on less than you make.
Level 2 — Strategy
What it is
- You control your paycheck with a plan for saving and investing.
- You intentionally educate yourself and automate financial actions.
- Start putting money to work (investments) rather than hoarding cash.
What it isn’t
- Not following cousin/party advice, chasing crypto/NFTs, or constantly switching “hot” tactics.
- Not stretching debt terms (longer car loans) to consume more.
How to get there (practical steps)
- Define long‑term goals and save consistently (rule of thumb: aim for ~25% of income; younger listeners may need 10–15%).
- Automate contributions (bills and savings on autopilot).
- Follow a financial order of operations for the “next dollar” decision.
- Use resources at moneyguy.com/resources (savings math, age‑based guidance).
Mindset note
- Be intentional; avoid short‑term optimization that doesn’t move net worth.
- Make good habits easy and bad ones harder.
Signs you’re there
- Fully funded emergency fund.
- Consistent investing behavior and a clear long‑term plan.
- Less anxiety about routine expenses because of automation and discipline.
Level 3 — Security
What it is
- You’ve executed the strategy long enough for investments to meaningfully work for you.
- Your assets offer resilience against unknowns; you can loosen micro‑control without derailing goals.
What it isn’t
- Not strictly income or net‑worth based — security depends on goals, time, and execution, not a single dollar threshold.
- Not immediate for most young people; it takes time for compounding to separate returns from contributions.
How to get there
- Stick to the financial order of operations and give compounding time to work.
- Continue disciplined saving; consider de‑risking as you approach/enter later stages (paying down low‑interest debt after ~45 may make sense).
- Avoid consumption spikes that destroy progress.
Mindset note
- Beware of becoming a financial miser—don’t let early frugality or hyper‑monitoring create anxiety or relationship strain.
- Trust the process: you’ve built the plan; let it work.
Signs you’re there
- Investments generate noticeable returns vs. just contributions.
- You can allocate money to longer‑range goals (second home, college funds, debt payoff) without stress.
- You can afford occasional lifestyle upgrades while staying on track.
Level 4 — Freedom (Financial Independence)
What it is
- Money provides the ability to “do what you want, when you want, how you want.”
- Your past work funds your present and future without needing labor income.
What it isn’t
- Not necessarily retirement/doing nothing — you may keep working by choice.
- Not an overnight achievement; it requires long-term discipline and planning.
How to get there
- Stress‑test withdrawal plans and retirement projections.
- Adjust asset and cash reserve allocations for living off investments.
- Plan for tax, retirement, and lifestyle transitions (Money Guy Guide to Retirement at moneyguy.com/resources).
Mindset note
- Don’t substitute saving with missing life experiences; money is a tool to create your desired life.
- Your financial practices will evolve—expect new complexities (taxes, estate decisions, giving).
Signs you’re there
- You have confidence your investments can sustain your lifestyle long‑term despite market risk.
- You have flexibility over time and work decisions; ability to prioritize non‑financial goals.
Level 5 — Abundance
What it is
- You’ve moved beyond money as the primary goal; you have clarity on purpose, contentment, and “enough.”
- Wealth is used to pursue meaning, create impact, and live intentionally.
What it isn’t
- Not a fixed dollar amount; “enough” is personal and subjective.
- Not automatic upon reaching Freedom — it requires mindset work and purpose alignment.
How to get there (mindset & behavior)
- Begin with the end in mind: define values, purpose, and the life you want to look back on.
- Use money intentionally to serve those goals (giving, time allocation, legacy).
- Cultivate contentment—avoid perpetual goalpost moving.
Signs you’re there
- Contentment with financial situation, purposeful use of time and resources.
- Ability to prioritize what truly matters and say “no” to distractions.
Key takeaways and actionable next steps
- Foundational rule: Live on less than you make. Everything else grows from this.
- Use the financial order of operations to decide the “best use” of each dollar.
- Automate savings and bills to reduce decision fatigue and mistakes.
- Avoid chasing hot investments and short‑term hacks; favor consistent long‑term plans.
- Recommended saving targets: ~25% for many; younger savers can aim lower (10–15%) but benefit from time.
- Work on mindset: define your why, avoid letting frugality become misery, and plan for lifestyle transitions.
- Resources: moneyguy.com (budgeting ultimate guide, resources page, retirement guides, downloadable financial order of operations).
Notable quotes
- “Live on less than you make.”
- “Money is a tool.”
- “Begin with the end in mind.”
Credits
- Hosts: Brian Preston and Bo Hanson (The Money Guy Show).
- Produced by Abound Wealth Management (informational content; not individualized investment advice).
Use this framework to self‑assess: which level are you at today, what’s the next level, and what one change will move you closer?